Watchlist Pick Acceleware Up 1333% in a Single Day

Back in February, we did something we had never done before with Smallcap Discoveries. We released a Top 10 list of stocks on our watch list. These were companies we still had work to do on – but we wanted to invite subscribers to research alongside us. Many smart minds are almost always better than two.

The list had companies that met almost all of our criteria. The key here is almost. Each had a couple of things we needed to see happen before investing. We warned a couple of these companies could go to zero. But we also knew a few could explode higher.

And an explosion it was for the number 3 stock on our watch list, Acceleware (AXE.V). AXE, you’ll recall makes high-tech seismic processing software for the oil & gas industry.

AXE closed trading last Monday at $.03 – 50% higher than the $.02 we profiled it at. By Tuesday mid-day, AXE shares hit a high of $.385. That’s no typo.. that’s a 1333% gain in a single day. Shares cooled off, but we still closed with a 766% gain. It’s not every day you see that!

So how does a stock make a move like that? By announcing a partnership with a Fortune 100 company to develop a game-changing technology. Specifically AXE landed a partnership with General Electric (GE:NYSE) to develop an oil sands heating technology based on radio waves instead of steam. AXE claims you can save 50% on operating costs and 66% on capital costs using their radio wave technology. Even oil dummies like us can recognize the huge potential if the technology works as AXE claims.

Before we get too excited.. we must confess to not buying the stock. It didn’t meet our criteria. Here’s what we said in our original profile:

“AXE hits just about all of our key criteria: niche dominance, rapid growth, and cheap valuation. The only thing it’s missing is two consecutive quarters of profits. We will be watching for AXE to grow its recurring software revenues and reach consistent profitability.”

We needed to see profitability and the Q1 results gave us just the opposite – a sequential revenue decline and a $365,000 net loss. We knew big companies prefer to work with other big companies – so we knew AXE had good technology. But we’re not smart enough to invest based on technology potential alone.

Fortunately, some of our subscribers were smart enough to invest in this technology. Mick from the SCD forums has been all over AXE even before we profiled it. A few investors on the Silicon Investor forum had held AXE for years. Even our own webmaster DJ made some beer money on this one. Congrats to the longs – and DJ, you owe us all dinner!

And that’s the fun part of investing. Many different styles can produce big returns. Not everyone will want to invest with our boring criteria. And we couldn’t stomach a lot of the speculative plays out there.

We will keep a close eye on these 10 stocks. We are also growing our watch list with another Top 10 list in the works. Stay tuned. Next time we hope to invest in the big winner – before it goes up over 10X in a day!

To your wealth,

Paul & Brandon